Question 1

Exhibit 1A-7  Straight line relationship   What is the slope of the line shown in Exhibit 1A-7?

Accepted Answer

A)  1/20. 
B)  1/10. 
C)  1/5. 
D)  1/2. 
A)  1/20. 
B)  1/10. 
C)  1/5. 
D)  1/2.

Question 2

When an inverse relationship is graphed, the resulting line or curve is:

Accepted Answer

A)  horizontal. 
B)  vertical. 
C)  upward-sloping. 
D)  downward-sloping. 
A)  horizontal. 
B)  vertical. 
C)  upward-sloping. 
D)  downward-sloping.

Question 3

Economic theories, or models, enable us to predict and to give reasonable explanations regarding economic variables.

Accepted Answer

A) True 
 B)False

Question 4

A direct relationship exists when:

Accepted Answer

A)  there is no association between two variables. 
B)  one variable increases and there is no change in the other variable. 
C)  one variable increases and the other variable increases. 
D)  one variable increases and the other variable decreases. 
A)  there is no association between two variables. 
B)  one variable increases and there is no change in the other variable. 
C)  one variable increases and the other variable increases. 
D)  one variable increases and the other variable decreases.

Question 5

Graphically express a direct and an inverse or negative relationship. What could cause a shift in a line or curve expressing a relationship between two variables?

Accepted Answer

A direct relationship will slope upward;

Question 6

Ceteris paribus means:

Accepted Answer

A)  an association of variables. 
B)  all other things remain constant. 
C)  a cause and effect relationship. 
D)  considering the influences of other variables. 
A)  an association of variables. 
B)  all other things remain constant. 
C)  a cause and effect relationship. 
D)  considering the influences of other variables.

Question 7

Which of the following questions would not be studied by a microeconomist but would be studied by a macroeconomist?

Accepted Answer

A)  Why do national economies grow? 
B)  What percentage of consumer income is spent on entertainment? 
C)  Why do workers prefer the 4-day workweek? 
D)  How is the electric industry harmed by the passage of new clean air legislation? 
A)  Why do national economies grow? 
B)  What percentage of consumer income is spent on entertainment? 
C)  Why do workers prefer the 4-day workweek? 
D)  How is the electric industry harmed by the passage of new clean air legislation?

Question 8

The statement "A tax cut would be the fairest way to stimulate the economy" is an example of positive economic analysis.

Accepted Answer

A) True 
 B)False

Question 9

What is scarcity and why does it exist? How is scarcity related to the study of economics?

Accepted Answer

Scarcity exists because resources are li

Question 10

A factor of production is the same as:

Accepted Answer

A)  the amount of a good produced. 
B)  the price of a good. 
C)  a profit of a firm. 
D)  an opportunity cost. 
E)  a resource. 
A)  the amount of a good produced. 
B)  the price of a good. 
C)  a profit of a firm. 
D)  an opportunity cost. 
E)  a resource.

Question 11

A graph is one method of expressing a model.

Accepted Answer

A) True 
 B)False

Question 12

A downward-sloping line has a negative slope.

Accepted Answer

A) True 
 B)False

Question 13

Exhibit 1A-10  Multi-curve graph   Exhibit 1A-10 represents a three-variable relationship. As the annual income of consumers rises from $20,000 (line A) to $40,000 (line B), the result is a(n):

Accepted Answer

A)  rightward movement along each curve. 
B)  leftward movement along each curve. 
C)  leftward shift in curve B to curve A. 
D)  leftward shift in curve A to curve B. 
A)  rightward movement along each curve. 
B)  leftward movement along each curve. 
C)  leftward shift in curve B to curve A. 
D)  leftward shift in curve A to curve B.

Question 14

A positive statement is:

Accepted Answer

A)  something good or desirable. 
B)  a call for improvement. 
C)  a statement of opinion. 
D)  a statement testable by facts. 
E)  a suggestion for policy. 
A)  something good or desirable. 
B)  a call for improvement. 
C)  a statement of opinion. 
D)  a statement testable by facts. 
E)  a suggestion for policy.

Question 15

Exhibit 1A-8  Straight line relationship   What is the slope of the line shown in Exhibit 1A-8?

Accepted Answer

A)  − 1. 
B)  − 1/2. 
C)  − 1/4. 
D)  0. 
A)  − 1. 
B)  − 1/2. 
C)  − 1/4. 
D)  0.

Question 16

The statement "Cutting government spending is the best way to boost consumer confidence" is an example of normative economics.

Accepted Answer

A) True 
 B)False

Question 17

The three basic categories of resources are land, labor, and:

Accepted Answer

A)  money. 
B)  time. 
C)  energy. 
D)  capital. 
A)  money. 
B)  time. 
C)  energy. 
D)  capital.

Question 18

A graph can be used to illustrate the relationship between the price of compact discs and the quantity of compact discs demanded. If there is evidence that buyers' income also influences the demand for compact discs, then a movement along the curve can be caused by a change in the price of compact discs.

Accepted Answer

A) True 
 B)False

Question 19

"Ceteris paribus " is a Latin expression that essentially means "holding everything else constant."

Accepted Answer

A) True 
 B)False

Question 20

Distinguish a direct and an inverse or negative relationship. Provide an example of each type of relationship.

Accepted Answer

A direct relationship between two variab

Exam 1: Introducing the Economic Way of Thinking

Exhibit 1A-7 Straight line relationship What is the slope of the line shown in Exhibit 1A-7?

When an inverse relationship is graphed, the resulting line or curve is:

Economic theories, or models, enable us to predict and to give reasonable explanations regarding economic variables.

A direct relationship exists when:

Graphically express a direct and an inverse or negative relationship. What could cause a shift in a line or curve expressing a relationship between two variables?

Ceteris paribus means:

Which of the following questions would not be studied by a microeconomist but would be studied by a macroeconomist?

The statement "A tax cut would be the fairest way to stimulate the economy" is an example of positive economic analysis.

What is scarcity and why does it exist? How is scarcity related to the study of economics?

A factor of production is the same as:

A graph is one method of expressing a model.

A downward-sloping line has a negative slope.

Exhibit 1A-10 Multi-curve graph Exhibit 1A-10 represents a three-variable relationship. As the annual income of consumers rises from $20,000 (line A) to $40,000 (line B), the result is a(n):

A positive statement is:

Exhibit 1A-8 Straight line relationship What is the slope of the line shown in Exhibit 1A-8?

The statement "Cutting government spending is the best way to boost consumer confidence" is an example of normative economics.

The three basic categories of resources are land, labor, and:

"Ceteris paribus " is a Latin expression that essentially means "holding everything else constant."

Distinguish a direct and an inverse or negative relationship. Provide an example of each type of relationship.

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Filters